The Department of Labor (DOL) has gone paperless this year, and all forms for the 2009 plan year must be filed electronically — no exceptions.

To help employers, the DOL has just launched its EFAST2 online filing system — and it’s ready to accept electronic submissions of Form 5500 and Form 5500-SF.

But there’s the rub: Using it requires an e-mail account, which according to recent reports, 20%-28% of small business owners (mostly older owners) still don’t have — leaving them vulnerable to steep fines.

The Department of Labor’s released new proposed regs on providing advice to participants in individual retirement plans.

The proposed investment advice rules are intended to make sure that workers receive unbiased advice about how to invest in 401(k)-type plans.

The DOL will be accepting comments on the regs until May 5, and the regs are expected to be effective 60 days after publication of the final rule.

Here’s a quick look at some of the key provisions.

According to the proposed rules, investment advice can be given under the Pension Protection Act’s statutory exemption from liability (which allows employers to hire outsiders to provide investment advice to plan participants), but only if the advice is provided in two ways:

• through a financial advisor who is compensated on a “level-fee” basis, or
• through the use of a computer model that is certified as unbiased.

Level fees

The financial services company has to charge a flat fee schedule — in other words, fees don’t change depending on what investment options participants choose.

Computer models

If the rules are adopted, computer models used to offer advice would have to be certified in advance as objective and unbiased by an independent expert.

To comment on the proposed rules, click here.

The funds were part of the budget it released earlier this month for fiscal year 2011.

Some noteworthy items in the DOL’s proposal:

• Part of the funds allocated for worker protection programs would allow the agency to hire 350 employees – 177 of which would be investigators and other enforcement staff.
• The Wage and Hour Division would receive $244 million in funding (up $20 million) and hire 90 new investigators and enforcement staff.
• The DOL also indicated it’ll crack down on employers that define workers as independent contractors.
• As part of a joint venture with the Department of the Treasury, the DOL budget includes $25 million to target employee misclassification and hire 100 additional enforcement personnel.
• The DOL has plans for a $50 million initiative to promote paid-leave experiments on the state level.

The budget request has ruffled the feathers of one congressman, John Kline (R-MN). He said the DOL’s plans would create an emphasis on punishment rather than compliance.

In addition, he claims the proposed budget will spark efforts designed to “demonize employers.”

What do you think? Let us know in the Comments Box below.

The new 401(k) rules are now being reviewed by the Office of Management and Budget. And the DOL hopes they’ll be out by the end of the month, said Phyllis Borzi, assistant secretary of labor for the DOL’s Employee Benefits Security Administration, speaking at a conference sponsored by the National Institute on Retirement Security.

Borzi didn’t say exactly what the new rules would cover. But she did mention they’ll be more faithful to the statutory provision than the ones we saw issued in the final days of George W. Bush’s presidency that would’ve allowed advisers affiliated with mutual fund and brokerage firms to provide investment advice.

Borzi went on to say that the new rules will be much more direct and streamlined, and will underscore the fiduciary duty of plan sponsors to carefully elect and monitor service providers.

In addition, she hinted that the Obama administration isn’t likely to waive fiduciary rules required of employers under the Employee Retirement Income Security Act (ERISA).

A new notice explaining that workers are now eligible for the 65% premium subsidy until Feb. 28 — and that the assistance period has also been extended from nine months to 15 — has to be sent to employees by Feb. 17.

The model notices are available on the Department of Labor’s (DOL) Web site here.

Earlier we reported that the U.S. Department of Labor (DOL) was hiring 250 investigators to seek out wage-and-hour violators — and the owners of five Oriental Forest restaurants, Li Jin Yang and Dong Lin, are among the latest to get caught in the DOL’s crosshairs.

They were found guilty of violating the Fair Labor Standards Act for failing to pay their workers proper OT and for paying less than the federal minimum wage — which at the time (2004) was $5.15 per hour.

The penalty: pay at least 129 workers more than $2 million in minimum wage and overtime compensation.

What’s required

Under the FLSA, the federal minimum wage is $7.25 per hour — or $2.13 in direct wages, if tips are considered part of wages. However, if an employee’s tips combined with the employer’s wage of $2.13 do not equal the $7.25 per hour, the employer must make up the difference.

The Employee Retirement Income Security Act (ERISA) imposes strict requirements on employers sponsoring 401(k), group life, medical, dental and disability plans to report financial information to the Department of Labor (DOL) on Form 5500.

U.S. Census Bureau reports show there are about 110,000 employers that employ 100 or more people — and public records show some 60,000 (55%) of these employers have not filed a Form 5500, according to a recent ERISA Pros’ study.

Could result in expensive penalties

An employer can be penalized by the DOL up to $1,100 for each day its Form 5500 is late. The penalty is cumulative and is applied separately to each benefit plan an employer offers.

That means fines can add up fast.

“An employer sponsoring life, medical, dental and disability insurance plans that flies its Form 5500s just 30 days late could be fined $132,000,” said Bernard Kearse of ERISA Pros. “If that employer earns 8% net after tax, it would have to generate $1,650,000 in sales revenue to pay for the government’s fine.”

New guidance has been issued by the Department of Labor to end the confusion surrounding COBRA subsidy eligibility.

While the feds are offering up a 65% nine-month COBRA premium subsidy to workers involuntarily terminated in the period between Sept. 1, 2008 and Dec. 31, 2009, some who lost their jobs during that time won’t be eligible.

What would keep a terminated employee from being eligible for COBRA? Being covered by their former employer’s health plan through Dec. 31, 2009.

As a result, the worker wouldn’t be eligible for COBRA until Jan 1, 2010 — just missing the cutoff for the subsidy.

On the other hand, if the person was terminated by Dec. 31 and was eligible for COBRA, he or she could receive the subsidy for a full nine months — even if that nine-month period extends well into 2010.

Two bills have been introduced to extend and even expand the COBRA subsidy, but the fate of the legislation remains unclear.

The DOL recently updated its Employment Law Guide, giving employers new information regarding the laws the agency enforces.

The new version includes info on recent legal developments, such as minimum wage increases and updates to the Family and Medical Leave Act (FMLA). Other topics covered include child labor laws, overtime payment and workplace safety regulations.

Access the Guide here.

When the employer was sued for national origin discrimination by two employees, it thought its defense was airtight: The employees failed to file their complaints within 300 days, as the law requires.

But the employees’ attorneys saw things differently. They argued that the statute of limitations didn’t apply because the employees, Chinese immigrants who didn’t speak English, weren’t aware of their rights until after 300 days.

One problem: The company failed to post the required notice of employee rights, so the employees weren’t aware they had a right to sue.

The court agreed and let the case move forward. Without the notice, the statute of limitations didn’t begin until the employees became aware of their rights under the law.

Lesson for employers: Keep all posters up-to-date, and include versions in multiple languages if your workforce requires it.

For more info on what posters you’re required to hang, use this tool from the DOL.

Cite: Zheng v. Wong